In re Michael Wilson & Partners, Ltd., No. 06-02575, 2012 U.S. Dist. LEXIS 72961 (D. Colo. May 24, 2012)

Respondents in this case objected to a Magistrate Judge’s recommendations that granted in part Respondents’ request for reimbursement of costs incurred in complying with subpoenas related to lawsuits pending in foreign jurisdictions, but rejected Respondents’ request for attorneys fees.

Respondents alleged that in response to subpoenas issued to them they produced approximately 15,000 documents and reviewed prior to production over 325,000 documents.  In addition, they prepared and produced a witness for a deposition.  In total, Respondents sought reimbursement for a total of $2,151,053 in costs and fees incurred by complying with the discovery requests at issue.  This total amount was comprised of $1,592,876 in costs and $558,177 in attorney’s fees.

The above costs included services rendered by KPMG for setting up a searchable document database, costs incurred by two law firms—Dorsey & Whitney and Marcus & Auerback—related to document review, and fees for contract attorneys and paralegals to search Respondents’ documents for documents responsive to the subpoena.

Respondents contended that under Rule 45 of the Federal Rules of Civil Procedure, which governs the issuance of subpoenas, Respondents were entitled to reimbursement for fees and expenses to avoid the imposition of an undue burden or expense.  In determining whether reimbursement was appropriate, the court considered whether (1) the non-party actually has an interest in the outcome of the underlying litigation; (2) whether the non-party can more readily bear the costs than the requesting party, and (3) whether the litigation is of public importance.  Other factors in the court’s analysis included the scope of the subpoena and the reasonableness of the costs of production.

Here, Respondents’ request for reimbursement was significantly undermined by the fact that the Respondents themselves had disputed the reasonableness of Dorsey & Whitney’s fees in a separate action.  Respondents alleged that they were overbilled by Dorsey & Whitney and that the total cost of their legal representation should have been no more than $571,187.  Among other things, the Respondents alleged that Dorsey & Whitney had mismanaged the discovery process resulting in unnecessary fees and expenses.

In addition, the court found that the Respondents were involved in the underlying litigation, had the ability to bear the expense of production, and that the underlying litigation lacked “public importance” and was solely a private dispute.  For these reasons the court reviewing the magistrate judge’s recommendations found that the decision to deny the reimbursement of any attorney’s fees was appropriate.  With respect to KPMG’s fees, the court concluded that partial reimbursement for establishing a searchable database was reasonable given that the database benefited both the issuing party and Respondents and, if used correctly, had the potential to significantly reduce document production costs.